Government’s attempts to collect two sets of business licensing fees from accountancy firms amounts to unfair double taxation that is not supported by the wording of the legislation, lawyers for five major firms argued in Grand Court Wednesday.
BDO Cayman, Deloitte and Touche, Ernst & Young, KPMG and PwC are seeking a Judicial Review of government’s decision to dismiss their appeals that a $2,000 fee for every accountant on staff should not be applied to them.
They argue that they already pay a “per firm” fee based on the number of accountants in the business and should not have been charged the second per-accountant fee.
The dispute relates to more than a decade’s worth of fees potentially payable by the firms up to the point when the Trade and Business Law was changed in 2016 to explicitly require that both fees be paid.
Before then, the firms say, the wording of the law did not indicate that more than one fee should be paid.
The outcome of the case could impact millions of dollars in government revenue.
Mac Imrie, representing the five firms, said before 2001 the Trade and Business Licensing Law had included a schedule of “per professional” fees highlighting the business licensing fee for various professions, including accountants.
In 2001, an additional category was added for “accountancy firms” with a sliding scale of fees ranging from zero charge for firms with less than five accountants and rising to $400,000 for firms with more than 50 accountants.
He said the firms believed this was now the appropriate category for them and from that point they were no longer required to pay the per-employee fee.
“This is the crux of the case,” Mr. Imrie said. “It is as simple as saying the new category for accountancy firms brought with it a new fee based on banded head count. That’s the fee set out on the schedule.”
He said if the government wished to impose two sets of fees on accountancy firms, it should have said so in clear and unequivocal words.
“The base position is that one fee is payable and multiple fees would require express wording.”
The law was changed again in 2014 (though not brought into force till 2016) to include an express requirement that both sets of fees were payable. Mr. Imrie said this was evidence that the original version of the law did not clearly mandate the payment of both fees.
Citing Hansard transcripts from the Legislative Assembly, when the accountancy firms fees were introduced, he said government members Rolston Anglin and Cline Glidden had made reference to the fact that the new per-firm fee meant that small firms of five employees or less would not pay any trade license fees.
“This demonstrates the legislative intent was to introduce a banded system which meant small firms were exempt from any fee and that firms could move between bands and add accountants without increasing fees,” Mr. Imrie. “The plan and ordinary meaning of the law is supported by the Hansard. It is really clear what was intended and what the words mean.”
The case was continuing Thursday in front of Justice Ingrid Mangatal.